36% of organizations in Ukraine reported economic crime in the last 12 months, says PwC

Every 3rd respondent believes that the risk of cybercrime has increased over the past 12 months.

More than 25% of organisations do not have adequate cybercrime incident response mechanisms and policies.

46% of respondents have not received any training related to cyber security during the last 12 months.

Economic crime in Ukraine

36% of organisations had experienced economic crime in the past 12 months

Every 3rd organisation does not perform fraud risk assessments.

Assets misappropriation (73%) and bribery and corruption (60%) remain the most common types of crime in Ukraine.

The majority of Ukrainian respondents who faced economic crime estimated losses up to $5m.

Every 5th organisation that has suffered from economic crime has not taken any actions against an internal perpetrator of fraud.

Kyiv, 12 December, 2011 – More than a third of businesses and other organisations around the world were victims of economic crime in the last 12 months, according to respondents to PwC's 2011 Global Economic Crime Survey. And 17% of victims in our country said they were subject to cybercrime.

Almost 4,000 respondents in 78 countries, including 84 representatives of Ukrainian entities took part in the 2011 Economic Crime Survey. The Global Economic Crime Survey has been conducted for the second time for Ukraine and gathered 23% respondents more than in 2009.

Overall, 34 % of global respondents said their organisations were victims of economic crime. Theft or asset misappropriation (cited by 72%) was the most common type of economic crime reported, followed by accounting fraud and bribery and corruption (24% each) and cybercrime (23%). Overall, 22% of global respondents said they did not know if their organisation had suffered a fraud.

In Ukraine, 36% of organizations reported being victims in the last 12 months. It is 9% lower than in 2009 (45%).

“We believe that the decrease reported by Ukrainian organisations for fraud in 2011 is explained by a low detection rate and owners gradually distancing themselves from day-to-day asset management rather than an actual decrease of fraud cases. There is a strong correlation between conducting fraud risk assessments and detecting fraud. The study revealed that the organizations performing regular fraud risk assessments reported more economic crimes”, said Boris Krasnyansky, Managing Partner of PwC in Ukraine.

Asset misappropriation remains the most common type of economic crime reported in Ukraine (73% in 2011 versus 59% two years ago), along with bribery and corruption in the Ukrainian market – 60% of respondents were affected in the last year. 30% of Ukrainian respondents report suffering from accounting fraud. The incidents of anti-competitive behaviour are a growing threat that more than tripled in 2011 – 23%. Cybercrime is number five (17%) and is a special focus of the survey this year.

This year’s survey in Ukraine represents views of representatives from more than 13 different industries. Financial services, retail and consumer, manufacturing and professional services represent more than a half (63%) of all survey participants in Ukraine.

47% of respondents Ukraine in the last 12 months reported losses up to $5m. The top three most expensive types of fraud were also the most common types, including assets misappropriation, bribery and corruption and accounting fraud. The cost of crime increases with the fraudsters’ age. The more expensive crimes (between $5m and $100m) were committed by individuals older than 50 years.

The survey finds that a very typical perpetrator of fraud worldwide is the so-called ‘white-collar criminal’. A white-collar criminal is a 30+ years old male individual employed by the organization for 3-10 years, with a postgraduate education, having good psychological health and a stable family situation. The majority of internal fraudsters in Ukraine are representatives of senior and middle management (40% each). To compare, 60% of internal crimes globally are performed by middle management and junior staff.

The most popular detection methods have remained the same for several years. Corporate security is again at the top of the list. Only 6% of frauds are identified by Internal Audit compared to 14% globally. More than half of survey participants (54%) do not use a whistle-blowing system. However, 82% of those who employed such a system consider it to be effective. 27% of respondents in Ukraine were not aware of the way fraud was initially detected, compared to 10% globally.

Cybercrime

Globally, cybercrime now ranks as one of the top four economic crimes. The perception of cybercrime as a predominantly external threat is changing, and organisations are now recognising the risk of cybercrime coming from inside as well. The Ukrainian respondents said the Information Technology Department was the most likely source of cybercrime internally (67%). IT is followed by Finance - 47%, Marketing and Sales - 37%, Legal - 27%, Operations - 22% as potential sources of cybercrime threats. Similar results are observed globally.

More than one third (37%) of Ukrainian respondents said they perceive the risk of cybercrime to be on the rise in 2011. In 2009, the reported cybercrime levels were insignificant and were not presented in the survey. 36% of respondents in Ukraine feel that cybercrime is an external threat, another 24% state that it is internal, and 34% would treat it as both.

“46% of respondents in Ukraine and 42% globally have not performed any cyber security training for their employees in the past 12 months – which would suggest that they are potentially unaware of the risks that cybercrime presents to their organization”,-commented Boris Krasnyansky.

Notes to Editors:

Methodology: The sixth Global Economic Crime Survey was carried out between June 2011 and November 2011. The survey questionnaire had three sections: a section with general profile questions; a section with comparative questions looking at what economic crime organisations had experienced; and a section on this year’s special topic, cybercrime. 3,877 people from 78 countries filled in the online survey. Participants were asked to answer the questions with respect to their organisation and the country in which they are mainly based.

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